Discount (décote)

A décote (discount) is a reduction in value. It expresses the fact that a buyer on the market would pay less for a property burdened by a constraint than for an identical property free of it. The most common constraints are occupation by a tenant, ownership in indivision (joint ownership), the illiquidity of a security (shares in a civil company), works to be carried out, an easement, a known risk or the conditions of a forced sale.

The Charte de l’expertise en évaluation immobilière (French property valuation charter) gives no scale and is careful not to: at § 2.1.2 it requires every discount or premium applied to be justified; at § 1.12 it recalls that there is no nationally accepted standard discount between a forced sale and market value. A discount is therefore not a percentage taken from a table, but a measure of what the market actually does or, failing evidence, an explicit line of reasoning.

Where the rule comes from

The three passages of the Charter (6th edition, November 2025) cited as sources frame the practice. Title II § 8.14 describes the discounts accepted in tax matters: discount on let properties compared with vacant ones, varying with the type of lease, and statutory allowances on the main residence. For company shares, article 1843-4 of the French Civil Code entrusts the valuation to an expert in case of dispute, and tax case law accepts discounts for illiquidity and for minority where they are demonstrated.

In a valuation report

I start from the value of the property free of any constraint, then identify each constraint and attach a reasoned discount to it: from sales of comparable properties affected by the same constraint where they exist, from a calculation of the loss of income or the cost of the constraint where they do not. I avoid stacking discounts that overlap: joint ownership and illiquidity may express the same obstacle to a sale. The report presents the unencumbered value, each discount with its justification and the final value. Where the value of a let property exceeds its vacant value (investment property, solid lease at a high rent), I say so: the Charter recalls that the valuation logic is not the same in investment and in tax matters.

Example

A flat with a vacant-possession value of €200,000, let at €620 per month under a residential lease, when the market rent is €720. The loss of rent over the likely period of occupation (five years) represents €6,000, to which is added the impossibility of selling to an owner-occupier, who makes up most of the local demand. Three recent sales of let flats in the area come out 10 % to 14 % below vacant value. I adopt a discount of 12 %, giving a tenanted value of €176,000, and explain why the 20 % discount sometimes put forward does not match this market.

Not to be confused with

A statutory allowance (abattement) is fixed by a tax provision and is not open to debate. A loss of value (moins-value) is a loss suffered because of a defect or a nuisance, to be compensated. A premium (surcote) is the opposite adjustment.